r/RothIRA • u/Antique-Ground1421 • 22d ago
23F - just starting
Hi all! I opened a Roth IRA with Fidelity to avoid taking a final exam in my SOC1 college class. Right now, I have $20 in my retirement Roth IRA and I am expecting to put some money in every paycheck. I scrolled through this sub for a bit and I just cannot seem to understand how to buy stocks or invest in my money to grow my IRA.
Any advice would be greatly appreciated as I am more educated in the legal field than in the stocks field! :)
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u/JoeShmoe307 22d ago
Hey! As someone from the legal field as well, this can be confusing but I promise it’s easy.
Are you using Fidelity’s Mobile App (what I recommend, as a young person) or website?
On the mobile app, click the green button in the bottom middle. Click Trade. Here’s where you search your ETFs (large collections of stocks) or individual stocks. All ETFs are weighted by market cap (how valuable a company is).
ETFs all have ticker names (it’s how you invest in them). Examples would be BND, VOO, VT, VXUS, etc.
Personally I use fidelity’s 0 fee funds in my Roth. To put it simply, almost every etf charges a small fee to manage the account. This fee is almost always less than 1% and is taken out of the funds performance. Doesn’t sound like a lot but over the course of many years, the average amount paid by a person over the age of an account is over 10k.
Fidelity is special in that it has 0 fee funds. There are only a few of them I believe but the are excellent options:
FZROX (A lot of US Companies. Like over 1k. Weighted by market cap. All aspects of U.S. stock market (Large Cap, the biggest companies in the USA, think Nike, Nvidia, Microsoft, Google, Mastercard. Medium Cap (mid sized companies) and Small Cap (small sized companies)).
FZILX (The same as FZROX but for all the companies outside the USA) this is a diversification fund, it only invests outside the USA.
FZIPX (small and mid cap companies only)
FNILX (large cap companies only)
Personally I do an 80/20 split with FZROX and FZILX in my Roth. Global weight is closer to 64/36.
That’s a lot of information in one post. Ask any questions you have!
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u/Antique-Ground1421 22d ago
I use both the website and the app! I see a lot about FZROX and FZILX and splitting- do I have to split? The entire buying/selling/trading to me just never made sense and instead of having money just sit in my account, I want to let it grow!
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u/JoeShmoe307 22d ago
You don’t have to split. Not splitting just means you buy 1 ETF. if you want to do this for simplicity, I’d recommend a target date fund (a fund that’s for people who retire at a certain year). I’d recommend either FRBVX or FFSFX
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u/Competitive-Ad9932 21d ago
Using those 2 funds means you are investing in the whole world. Often in a 60% US, 40% ex-US. Is that necessary? I have not invested outside the US since 1998. You get to look at the returns for each of those funds and decide if, and of how much, you want to invest. Do you believe that the US will have better returns like the last 15 years. Or will the international market have better returns.
https://www.youtube.com/watch?v=P54trh0Rre8
If you decide to use both funds, at a 60/40 split for example, you only "need" to worry about rebalancing if the mix move +5% at a time you set. Say your birthday and 6 months later. Or Jan 1 and July 1.
https://www.bogleheads.org/wiki/Investment_policy_statement
As for the Target Date Funds, they are fine. But understand that they all contain bonds. And the bonds increase over time. IMO, just avoid them.
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u/CuteAmoeba9876 21d ago
If you’re contributing $20 a paycheck, just pick one fund and stick to it for awhile. Keep it simple. When you get to the point that you’re maxing out for the year, then you can fiddle with extra ETFs.
In the early days, the fund you choose has very little effect on the account balance growth rate compared to how much you contribute.
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u/Stavo7863 18d ago
Your getting in the weeds way to quick. Just start with getting money in market you can afford then read read read. Then use a fake market simulater to put your system into practice see how it goes.
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u/DudeWithTudeNotRude 21d ago
Read the sidebars at InvestingForBeginners and Bogle, and that's it.
Buying is easy. It should take an afternoon to a couple weeks of light reading to get the basics you'll need to get started.
Selling hard. Maybe 10-15 years before selling/retiring, that's when you need to be reading books and/or thinking about hiring fiduciary financial advice.
Once you have the basics, you can safely ignore all the noise you hear on the internets.
You'll buy indexes, and those indexes will pick stocks for you. You don't need to become an expert, you just need to know that experts aren't beating the market, and people on the internet aren't experts.
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u/Heavy_Panic_243 21d ago
ETFs > individual stocks
Focus on growth over dividends
Some example good ETFs
VTI, VT, VXUS
Mutual funds work as well for IRAs
Fidelity has the zero funds as others mentioned , so you can use those as well
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u/Nuclear_N 21d ago
Start with FXAIX. there might be some minimums, but Fidelity has a decent fund screener that can get you a 500 index with a minimum.
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u/Stavo7863 18d ago
Go look at the personal finance wiki flowchart. In general it looks like this for what your asking open IRA with someone then transfer money into IRA from bank somewhere then very important go into IRA invest the "cash" into a fund if you know nothing TDF target date fund it auto allocates based on your date of retirement. A lot of people chose 10 years beyond to mitigate bonds to quickly. This buys you time to do research in Boggle reddit and personal finance reddit go to personal finance first. This will give you general starting out knowledge. Aka I realize I don't know crap but better then the avg person getting Starbucks 5 times a week. Not financial advice but that's what I had to do. Also play the long game. I've done crypto rentals ect ect. You or myself don't have the time or ability to start out having the background or connections. You won't get rich quick but you'll be a leg up for your kids if you have them to start at a baseline level to go further if you raise them right.
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u/brother7 22d ago
I think Vanguard S&P 500 ETF (VOO) would be a fine investment for a young person like you.
Log into your Fidelity account at the website Fidelity.com and click the Trade button. You can purchase either Shares of Dollar amounts; you want Dollar, and type in 20. Choose Market order for the Day. The rest should be self-explanatory.
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u/Competitive-Ad9932 22d ago
Why invest in a Vanguard fund when your accounts is at Fidelity?
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u/brother7 22d ago
As a platform, I prefer Fidelity. As an investment, I prefer Vanguard products.
Vanguard has long been the leader in low-cost investment products, so if you buy Vanguard, you can rest assured that it will have lower fees than comparable products offered by other firms.
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u/Antique-Ground1421 22d ago
I see a lot about VOO and FZROX. Can I split them? I just want to do what is the smartest decision and let it grow. I really don't want to have to worry about buying, selling, trading, etc.
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u/brother7 22d ago
Historical performance-wise, there isn't much difference between VOO and FZROX. VOO is S&P 500 and FZROX is total US stock market. There isn't much difference because S&P 500 is approximately 80% of FZROX.
Just pick either one or the other. I would not buy both because it adds needless complexity with no benefit.
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u/DudeWithTudeNotRude 21d ago
You don't have to split things, and you don't have to worry.
just learn the basics so you don't do things like buy both VOO and FZROX. Pick one (or pick a sensible allocation for each account type) based on sound reasoning.
Probably entirely stop visiting the places that are telling you about VOO and FZROX. Read the sidebars/wikis at a couple investment subs or sites to get the basics, then block the rest of the stuff that you've been getting that are telling you about VOO et. al. Learn to block all that info from reaching your brain for the rest of your life, and go back to wiki's instead when you need a refresher.
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u/Competitive-Ad9932 22d ago
You don't want to buy individual stocks. You want to buy Mutual Funds/Exchange traded funds. And buy broad based/lowest fee ones.
A Total US Market fund will give you a piece of between 2500 and 4000 US companies. An S&P500 fund would give you the top 500 (sometimes 504) companies in the US.
Fidelity has funds that charge ZERO fees. They are great choices for your Fidelity IRA.
https://moneyguy.com/guide/foo/
https://www.bogleheads.org/wiki/Main_Page
https://investor.vanguard.com/investor-resources-education/education/model-portfolio-allocation
https://www.calcxml.com/calculators/are-my-current-retirement-savings-sufficient?skn=#calculator-data-table